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On 2 May the European Commission (EC) announced its EU Budget Proposal for 2021-2027. The simple fact that the UK will leave the EU means that the budget will have to be substantially revised, as reported by TOC before. As the press release puts it:

Brexit will leave a sizeable gap in our budget.

The response is to both cut expenditure and – essentially – raise new taxes, which is euphemistically called ‘own resources’.

Because it wants to “match ambitions with resources” the EC says it will fund “new and pressing priorities“. Amongst those are research and innovation, young people (?), the digital economy (?), the pet peeve sustainability, border management, and security and defense. The EC believes this will “contribute to prosperity, sustainability and security in the future.” It illustrates these ambitions by explaining that the budget of Erasmus+ (now €14.7 billion) and the European Solidarity Corps (now €341.5 million).

If that doesn’t sound like preparing to spend less money, because there is less money coming in, that is because it doesn’t look like that is what is happening. In fact, the EC seems to be proposing that the 27 remaining member states simply pick up the UK’s bill:

New priorities need new investment. This is why the Commission proposes to fund these through a combination of fresh money (roughly 80%), redeployments and savings (roughly 20%).

The suggestion seems to be that there will be a cut in the EU’s budget of (substantially) less than 20% of the “sizeable gap” left by Brexit. Where will the EU find that 80% fresh money?

Simply put: by taxes. More details can be found here (PDF), but essentially the EC wants:

– 20% of the revenues from the Emissions Trading System;
– A 3% call rate applied to the new Common Consolidated Corporate Tax Base (to be phased in once the necessary legislation has been adopted);
– A national contribution calculated on the amount of non-recycled plastic packaging waste in each Member State (0.80 € per kilo).

So next time you hear Timmermans wax lyrically about the environment, remember that it’s his pay-check.

Luckily, the best is yet to come. In the press release, the EC proposes a

strengthened link between EU funding and the rule of law. Respect for the rule of law is an essential precondition for sound financial management and effective EU funding. The Commission is therefore proposing a new mechanism to protect the EU budget from financial risks linked to generalised deficiencies regarding the rule of law in the Member States.

This means that when the EC decides that the rule of law in a member state is deficient, it can “suspend, reduce or restrict access to EU funding.” It does not mean, as European Commissioner for Justice Věra Jourová said in an interview with Politico, that

If a state now protests against this, the state kind of admits that they will not be guaranteeing in the future the sound financial management and protection of EU money.

It is ironic that Politico presents the measure as a

move [that] was widely seen as a warning shot to Hungary and Poland, which have both clashed with the Commission over rule of law, and to other countries that may be tempted to backslide on democratic standards.

How democratic is it, when an unelected body such as the EC decides to give itself the competence to decide that a member state’s rule of law is deficient? How respectful of the rule of law is it, when that same body decides it will reverse the burden of proof? As becomes clear from the official documentation, the EC’s decision will be accepted under reverse qualified majority voting, and as such

is deemed to be adopted by the Council unless it decides by qualified majority to reject the Commission’s proposal.

Furthermore, the documentation says

The proposed mechanism would not affect the individual beneficiaries of EU funding under the budget, since they cannot be held responsible for generalised deficiencies in the rule of law system. Member States would continue to be obliged to implement the affected programmes and make payments to Erasmus students, researchers, civil society or any other final recipients or beneficiaries.

All in all, the proposed budget hides a cynical power grab, completely in line with professed EU values such as democracy, solidarity and the rule of law.